The People's Bank of China has announced the transition of the digital yuan into the "Digital Deposit Money 2.0" era, effective January 1, 2026. This shift will see digital RMB wallets earning interest, marking a significant evolution from its previous status as non-interest-bearing digital cash. This change redefines the digital yuan's legal nature, integrating it into commercial banks' balance sheets and enhancing its appeal as a strategic asset. The introduction of interest payments on digital yuan balances is expected to have a profound impact on Hong Kong's financial ecosystem. It positions the digital yuan as a competitive tool for cross-border capital retention, bolstering Hong Kong's status as an international digital asset hub. The interest-bearing feature enhances the digital yuan's credit appeal for tokenized asset issuance and settlement, offering a higher credit rating than tokenized deposits from individual banks. This development is anticipated to support Hong Kong's initiatives in asset tokenization and strengthen its financial infrastructure. Furthermore, the interest-bearing digital yuan is set to stimulate innovation in financial services within Hong Kong, providing opportunities for fintech advancements. It complements Hong Kong's "e-HKD" by serving cross-border retail payments and trade settlements, thereby reinforcing Hong Kong's role as a pivotal cross-border financial bridge.